Donors to Romney super PAC have ties to for-profit colleges

By Fredreka Schouten and Ray Locker, USA TODAY

WASHINGTON
–
For-profit colleges and individuals with ties to them have donated $430,000 to a super PAC spending millions of dollars to help elect Republican Mitt Romney to the presidency — as the industry faces intense federal scrutiny over recruitment practices, educational quality and the amount of debt its students incur.

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The Apollo Group, which owns the University of Phoenix, contributed $75,000 last month to Restore Our Future, a super PAC run by former Romney aides. The pro-Romney super PAC is one of the biggest players in the GOP's long-running nomination fight, pumping more than $38 million into commercials, direct mail and automated phone calls that promote Romney and attack his GOP rivals.

Other Restore Our Future donors linked to the industry include James "Bill" Heavener, the CEO of Full Sail University, who gave $85,000 to the super PAC and serves as a top Romney fundraiser in Florida, and C. Kevin Landry, an executive with TA Associates, a private equity firm that has a minority ownership stake in Full Sail. He donated $120,000 to the committee, records show.

Another prominent industry figure: Todd Nelson, the CEO of Education Management Corp., and his wife, Amy, have donated nearly $5,000 to Romney's campaign. Both serve on Romney's fundraising team in Arizona. Amy Nelson, using a post office box in Utah as her address, also contributed $50,000 to Restore Our Future on Feb. 13, campaign-finance and property records show.

Nelson's company, which enrolls about 150,000 students at Brown Mackie College, Art Institutes and its other schools, is embroiled in an $11 billion lawsuit from the U.S. Department of Justice and several states, alleging the company broke federal rules by paying commissions to recruiters as an incentive to enroll more students.

The firm has denied wrongdoing. Nelson said his political activity is unrelated to company business. "I've given to those who I feel can help our country," he told USA TODAY.

Asked about his wife's $50,000 donation, Nelson said: "I'm aware of some of the things my wife does and some not." Attempts to reach her were unsuccessful.

The donations come as the industry grapples with unprecedented attention from Washington. The Democratic-led Senate education committee has investigated schools' recruiting practices and the big loans assumed by its students, many of whom are low-income. New rules imposed by the Obama administration will measure the colleges on students' loan-repayment rates and their ratio of income to debt once they finish school.

The industry has donated to both parties. Full Sail's co-chairman Ed Haddock has donated more than $60,000 to Obama and the Democratic National Committee for this election, and served as an Obama fundraiser in 2008. Apollo Group founder John Sperling, meanwhile, has donated $47,800 to Democrats' 2012 congressional election efforts.

In this election, Romney has emerged as an enthusiastic backer of for-profit education and singled out Full Sail and the University of Phoenix for praise, as the The New York Times noted earlier this year.

In an interview with Iowa's Ames Tribune last December, for instance, Romney said for-profit institutions such as Full Sail "hold down the cost of their education" by offering students an alternative to traditional colleges and increasing competition.

"You are going to find students, saying 'You know what? That's not a bad deal. I'm not willing to come out of college with $100,000 in debt,' " Romney said.

"The alternative is to say that the government is going to pay for them," he added. "If the government starts writing checks for people to go to university, they'll just keep on … raising their rates."

But education experts and industry critics say for-profit schools already rely heavily on the government to pay the bills.

"Their revenue stream is almost completely dependent on the federal government," said Kevin Kinser, an expert on higher-education policy at the State University of New York-Albany. About six in 10 for-profit schools received more than 70% of their revenue from federal student-aid programs, according to the U.S. Education Department.

While the industry enrolls about 12% of the nation's higher education students, it accounts for nearly half of student-loan defaults, said Sen. Tom Harkin, D-Iowa, who led the Senate investigation. In an interview, Harkin called for-profit schools a "predatory" industry that provides a "quick buck for Wall Street, but taxpayers and students are left holding the bag."

Romney and his campaign have other ties to the industry. Goldman Sachs Capital Partners has a nearly 42% ownership stake in Educational Management Corp. Goldman Sachs employees are the largest source of campaign donations to Romney. Through their blind trusts and retirement accounts, Romney and his wife, Ann, also have millions of dollars in investments in dozens of Goldman funds.

In a statement, Romney spokeswoman Andrea Saul said it's important to protect students and taxpayers from "low-quality educational programs and unnecessary and excessive debt." However, regulators should focus "on stopping abuses," she said, instead of "adding unnecessary and burdensome regulations—a common occurrence during the Obama administration."

Landry and Heavener said their contributions have nothing to do with for-profit schools.

"I'm a fan of Mitt Romney's," Landry said in an interview. "I want my country back. … I want it back from Obama and Nancy Pelosi and Harry Reid," referring to the top Democrats in the House and Senate.

Heavener called Romney "the best candidate for what America needs at this time. We have 25 million people out of work," he said in an email, "and I believe with his experience, he can get America back to work."

In a statement, Apollo Group spokesman Rick Castellano said the company backs "candidates who understand the important role Apollo Group plays in American higher education."

Officials with the Association of Private Sector Colleges and Universities, industry's trade group, say they play an important role in serving low-income and non-traditional students who don't go directly to four-year colleges from high school.

"There are voices in public policy today who don't believe you need to have for-profit delivery of higher education," said Steve Gunderson, a former Wisconsin congressman who is the group's new president. "We meet a need. Don't blame schools for the students they serve."

Contributing: Christopher Schnaars

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